South Florida Arbitration & Litigation Lawyer Blog
Private Securities, Private Placement and Direct Investment Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
April, 2012:
Securities and Exchange Commission v. City Capital Corporation, Ephren Taylor II and Wendy J. Connor, Civil Action No. 1:12-cv-01249-WSD (N.D. Ga.)r
SEC Charges Ephren J. Taylor, II with Operating a Ponzi Scheme
Recently, the Securities and Exchange Commission charged Ephren Taylor II with running a Ponzi scheme that targeted investors in church congregations. The SEC also charged City Capital Corporation and its former chief operating officer Wendy Connor for their roles in the scheme.
According to the SEC, Taylor and City Capital raised approximately $11 million through two fraudulent offerings: (1) promissory notes supposedly funding various small businesses, and (2) interests in “sweepstakes machines.” In addition to promising high rates of return, the SEC alleges that Taylor assured investors he had a long track record of success, that investor funds would be used to support businesses in economically disadvantaged areas and a portion of profits would go to charity.
In reality, according to the SEC’s complaint, investor money was used to pay other investors, finance Taylor’s personal expenses, or fund City Capital’s payroll, rent, and other costs. City Capital’s business ventures were consistently unprofitable, and no meaningful amounts of investor money were ever sent to charities.
The SEC’s complaint alleges that City Capital, Taylor and Connor violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The complaint also alleges that Taylor and Connor violated Section 15(a)(1) of the Exchange Act, and aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint seeks disgorgement, financial penalties and permanent injunctive relief against all defendants, as well as officer and director bars against Taylor and Connor.